Diversification of Islamic Financial Insturments
179
compliant Financial Instruments fall under the Cash Instruments. It includes
secondary Sukuk, Islamic Equities, Murabahah and Islamic ETFs180.
3.9.4 TAKAFUL (ISLAMIC INSURANCE) IN BAHRAIN
The Takaful industry in Bahrain is one of the fastest growing segments in Islamic finance.
There are currently six Takaful operators and two Re-Takaful companies in Bahrain, including
Takaful arms of conventional insurance companies, such as Allianz Takaful Bahrain and
Hannover ReTakaful. One of the major drivers of the industry's growth in recent years has
been the implementation of compulsory health insurance schemes and compulsory insurance
for motors (Third Party Insurance), as well as the increasing demand for Shariah compliant
insurance, growing public awareness about Takaful and the existence of legislations that
promote the development of Takaful in Bahrain. 181 CBB’s insurance rulebook regulates the
Takaful industry.
In 2014, the CBB revised the Operation and Solvency framework for Takaful and Retakaful
industry. Revisions were aimed at keeping shareholders’ Qard injection to a minimum and
ensuring the adequacy of fees and charges levied in the hybrid Wakala-Mudharaba model
operational in the kingdom. The revised model emphasises the creation of adequate reserves
and ensures the solvency of participants’ fund in an attempt to protect the interests of all
stakeholders.
According to the CBB, the Takaful industry’s gross contributions grew 3% in 2015 compared to
the previous year, as a result of this change182. Takaful Firms in Bahrain contributed around
23% of the total gross premiums in the insurance industry in 2015, which was equivalent to
USD 167 million 183. This represents a remarkable growth when compared to a share of only for
3% of Bahrain’s insurance premiums in 2001184.
Re-Takaful firms in Bahrain contributed around 21% of the total reinsurance gross premiums
in in 2015185.
The commonly used Takaful products are family and general products as they benefit the
policy holders and the community as a whole. The family Takaful enables families to ensure
their future despite unforeseen circumstances. The general Takaful includes the protection of
products, such vehicles and houses, and the needs of the business community. General Takaful
remains dominant in the Bahraini Takaful industry. The share of family Takaful in the total
180 Bahrain Financial Exchange website, Product Framework, accessed 1 March 2017. See
181 Central Bank of Bahrain, The Review (December 2014), accessed 13 March 2017, see
182 Central Bank of Bahrain, Insurance Market Review (2015), p4, accessed 13 March 2017, see
183 Central Bank of Bahrain, Insurance Market Review (2015), p 10, accessed 13 March 2017, see
184 Mena Insurance CEO Club website, Takaful Market Profile - Bahrain: Setting its sights high on takaful, accessed 19 March
2017
185 Central Bank of Bahrain, Insurance Market Review (2015), p 30, accessed 13 March 2017, see